I will now suspend the House for no more than five minutes in order to make a decision about certification. The Division bells will be rung two minutes before the House resumes. Following certification, the Government will table the appropriate consent motions, copies of which will be made available in the Vote Office and distributed by the Doorkeepers.
I can now inform the House that I have completed certification of the Bill, as required by the Standing Order. I have confirmed the view expressed in the Speaker’s provisional certificate issued yesterday. Copies of the final certificate will be made available in the Vote Office and on the parliamentary website. Under
It is always a pleasure to serve under your chairmanship, Sir Lindsay, especially when we are in such privileged surroundings as the de facto English Parliament. As you know, I always think that it is important that we mark and commemorate these auspicious occasions when English Members of Parliament get the opportunity to express their true English political values and to get to their feet, en masse, to discuss and debate these critical English-only issues. I also like to make a contribution in these events, as you know, Sir Lindsay. I have the proud record of having taken every single opportunity to speak when the English Parliament has met. In fact I have got the record—I have taken up something like 80% of the time in the English Parliament.
What surprises me is that when this opportunity is available to English Members, they cannot seem to bring themselves to actually consider and debate these critically important issues. There are important issues in this Bill that are English-only. In fact, the whole Bill is English-only, which rather prompts the question of why on earth we are doing this. I know that the Serjeant at Arms needs a bit of exercise, and it is quite an onerous responsibility to take the Mace down and then put it back up. We obviously need an opportunity to see if the Division bells are still working, so the bells will go on and off, but then nothing ever happens. What is the point of this ludicrous session that we go through every time that a Bill has been certified in this way?
My hon. Friend is absolutely right to ask what is the point because under the Government’s position, this English Parliament passes a legislative consent motion, but the experience of the Scottish Parliament is that legislative consent motions are worthless, and that the Government do not need legislative consent motions from the constituent parts of the United Kingdom to pass their legislation.
My hon. Friend makes a good and valid point, because legislative consent does seem to mean different things in different Parliaments. Here, for example, we have the Legislative Grand Committee: an innovation of this Parliament to allow English Members the opportunity to put forward their own particular English-only issues and amendments. In Scotland, of course, we have legislative consent motions that require our Scottish Parliament to agree, on its own behalf, to legislation passed in this House. There seems to be a particular problem with this. We have our own Parliament that is responsible for legislative consent motions, which are now more or less ignored by this Parliament. Here we have the English Legislative Grand Committee squatting in the UK Parliament. This is the Parliament of the United Kingdom of Great Britain and Northern Ireland, but somehow it still operates as a de facto English Parliament and as the venue for this Legislative Grand Committee.
It strikes me that that might be a bit odd. I have a little solution that I have presented to this House before, thus far without any great success and without anybody really paying attention to what was suggested, so I will make one more attempt: how about English Members getting their own Parliament? Then there will be a Scottish Parliament, a Welsh Assembly, a Northern Ireland Assembly and an English Parliament. Then, instead of having all these Legislative Grand Committees, we can all come together in a United Kingdom Parliament that is responsible for particular, defined issues, instead of having this ridiculous notion where English colleagues seem almost to squat in this place in order attend a debate that nobody takes part in.
I would be grateful to know how Union issues of foreign affairs and defence, which the people of Scotland voted in a referendum should continue to be dealt with by the United Kingdom, would be covered by the hon. Gentleman’s proposal.
I only have a few seconds left. I am surprised at the Minister, because he is an erudite chap who understands constitutional issues and the history of this nation. Quite succinctly, I will tell him what it is called. It is called federalism, which is where there are constituent Assemblies that have equal power and authority, and there is then another stratum of government, which would be the UK Parliament—
Order. You did better than normal, Mr Wishart.
Debate interrupted (Programme Order,
The Chair put forthwith the Question already proposed from the Chair (
That the Committee consents to the Civil Liability Bill [Lords].
Question agreed to.
The occupant of the Chair left the Chair to report the decision of the Committee (
The Deputy Speaker resumed the Chair; decision reported.
I beg to move, That the Bill be now read the Third time.
It is with great pleasure that I rise to speak on Third Reading. This Bill has been a long time coming. The first suggestions of the Bill’s introduction date back to 2012, six years ago, and the precise measures in the Bill were proposed by the Chancellor in an autumn statement in 2015, more than three years ago. Since then, there has been a series of detailed consultations. I would like to pay tribute to the Justice Committee for its prelegislative scrutiny, particularly on the issue of discount rates. Perhaps the biggest tribute must be paid to all Members of the other House, who undertook a very serious series of debates, which led to a number of significant changes to the Bill that I hope all Members of the House agree are significant improvements.
Perhaps the most dramatic improvement is the Government amendment that ensures insurers pass on savings to their customers. A number of learned, hon. and right hon. Friends have expressed concerns that were we to achieve a situation in which the insurance companies paid out less to claimants, that would simply go into the insurance companies’ bottom line. We have therefore introduced through an amendment perhaps the most detailed and unprecedented reporting requirements incumbent on the insurance companies to the Treasury and the Financial Conduct Authority.
I will give way in one moment. To clarify, the intention is that the companies not just may but will pass this information to the Treasury and the Financial Conduct Authority, and the Treasury and the Financial Conduct Authority not just may but will request that information, so that we can accurately explain to Parliament and the people how much money the insurance companies are making from their premiums, how much they are paying out to claimants, how much savings they are making and how much of those savings they are passing on to their customers.
Absolutely. It is an unprecedented move. The fundamental idea is that the insurance companies are operating in a competitive market, so this is not simply a question of how much money they take in premiums or how much money they pay out; it is also about attracting customers, and in order to attract customers, they need to compete with one another on price. If they were not to do so, they would in effect be running a cartel, and the information they give to the Treasury and the Financial Conduct Authority would provide exactly the evidence to display that kind of unfair practice. We are therefore guaranteeing that the commitment made by 85% of the insurance industry to pass on these savings to customers will be upheld. I give way to Emma Little Pengelly. [Interruption.] Oh, no, she was not intervening on me. I apologise.
I must say that I have been confused with many things, but to be confused with an hon. Lady from the DUP is a first.
My hon. Friend the Minister, perfectly properly and quite rightly, is placing very important obligations on the insurance industry. The FCA has a raft of things of which it has oversight. How is he proposing, alongside the Treasury, to communicate to the FCA that this House has the legitimate expectation that the FCA should be robust in seeking that information from the insurers?
This is a very good challenge, and we will reinforce that duty on the FCA through both the legislation and the statements within the amendment proposed by the Government. We will also reinforce it through this statement from the Dispatch Box: we will require the insurers to pass this information on and we will require the Treasury and the FCA to request it. The purpose of requesting that information is rigorously to hold the insurance industry to account and ensure that the savings are passed on to customers.
I want to take this opportunity to pay tribute to the personal injury lawyers. One of the problems in this debate has been the suggestion that it is a black-and-white, sometimes Manichean dispute, with the press and civil society sometimes unfairly implying that the personal injury lawyers are somehow to blame. We must put on the record very clearly our respect for the personal injury lawyers and the work they do.
In addition, we must send a very strong message of respect towards people who are genuine victims of whiplash injuries, or indeed of any other form of personal injury. They are entitled to a fair level of compensation and to an adequate level of representation. We believe very strongly that the measures in the Bill strike a proportionate and reasonable balance between fair compensation, reasonable representation and the costs imposed on the rest of society.
My hon. Friend makes a very good point about the personal injury lawyers. One of the provisions in the Bill—I think it is clause 8—states that claims management companies will be regulated by the FCA. We already regulate the insurance industry, so how do we make sure there is no conflict of interest in the regulation of both those parties, which often have competing interests?
This is a very interesting point, and I am very happy to follow up on it in more detail. The nature of the regulation in each case is quite distinct. In relation to the insurance industry, the regulation proposed is to ensure that we have the financial information to prove that the savings the insurance industry has derived from these reforms are passed on to customers. In the case of the claims management companies, the regulation is to ensure that they comply with the law, particularly the legal changes introduced by previous legislation. In accordance with the suggestions from the Justice Committee, we are also looking at the advice forthcoming from the judiciary to ensure that we can deal with other issues involving claims management companies.
If I may, I will come back to the core of the Bill. We are dealing with a perfect storm of three things. First, at the minor end of whiplash injuries—the three-to-six-month end—this is a condition that, in effect, is unverifiable and difficult to disprove. The polite way of expressing this is to say that there is an asymmetry of information. Somebody suffering a whiplash injury will experience genuine and sincere pain, but that pain cannot be detected at the minor end through any medical instruments. That is the first challenge involved in this type of injury.
The second challenge is of course the level of payments offered to individuals suffering these injuries. The third is the level of recoverable costs which meant, in effect, that a no win, no fee process was operating in which people could apply to a lawyer to represent them and be confident that the legal costs would be recoverable from the defendant. When that is connected to the fact that for all the reasons I have given—particularly the first, asymmetry of information—the insurance companies are not contesting claims, we end up with a discrepancy rapidly emerging between the number of motor vehicle accidents and the number of claims, and between the number of claims made in the United Kingdom and the number made in other jurisdictions.
“reluctantly persuaded that this provision is justified: it is surely intolerable that we are known as the whiplash capital of the world, so I have concluded that it is open to government, as a matter of policy, to seek to deter dishonest claims in this way.”—[Official Report, House of Lords,
Vol. 791, c. 1603.]
It is a sensitive issue, because of course many individuals who have even quite a minor road accident experience a whiplash injury and have significant pain, particularly in the soft tissue of the neck and shoulders, which can last three to six months in the majority of cases or longer in a minority of cases. However, the New England Journal of Medicine, which conducted a significant study across various countries, concluded that the prognosis for a whiplash injury was significantly worse in countries in which compensation existed. In other words, there appears to be some form of medical relationship between the compensation offered and the prognosis for the whiplash injury.
How that relationship operates is a matter of speculation, but the following things may explain it. First, compensation payments and the encouragement provided by claims management companies, particularly on the telephone—we have heard a great deal of anecdotal evidence about that today—could encourage individuals to make claims that they may not themselves feel are as justified as the claims management companies imply. That leads to serious problems, the first of which is moral. It is a problem of dishonesty. In effect, it appears that some people—we do not know how many, but certainly a significant minority—are being encouraged to make dishonest insurance claims. As hon. Members have pointed out, that is potentially morally corrosive to our society. We do not want to encourage a system in which people feel that they can make such claims.
The second problem is that the situation has had a disproportionate impact on court time. Lord Faulks has said:
“If there was to be a reduction for really serious injuries, I can imagine why noble Lords would baulk at the imposition of a tariff. However, we are for the most part talking about pain and discomfort of a relatively transient nature…So these reforms—quite modest though they are—are a proper response to what I would describe as a racket.”—[Official Report, House of Lords,
Vol. 791, c. 1607.]
The cost to society imposed by this compensation is disproportionate to the severity of injury.
This might sound like an unrelated point, but surely the best way to deal with whiplash is to prevent it from happening in the first place. I believe that in 2015, the Government committed to spending £1.5 billion on 10 smart motorway schemes, the idea of which is to keep traffic flowing at a constant speed. If people are stopping and starting all the time, they lose concentration and are more likely to drive into the car in front of them, resulting in a possible claim for whiplash. The Government are dealing not just with the problem itself but with the root cause.
That is a very good point. Fundamentally, our prime obligation must be to improve road safety. Both the Labour Government and our own Government have made progress in that regard. In fact, over the past 15 years we have seen a 35% reduction in road traffic accidents, and, as we have heard, the safety equipment in vehicles has improved dramatically. Whereas 15 years ago only 15% of vehicles were fitted with equipment that can protect someone from whiplash, 85% now are, so people are safer in their car and less likely to have an accident. However, my hon. Friend’s central point is absolutely right. Very tragically—I have experience of this through my constituents, as will other hon. and right hon. Members—if someone who was killed in a motor car did not have a dependant, their family would be entitled to almost no compensation at all. Our obligation must be to prevent the accident from happening in the first place.
Earlier this afternoon, the Minister will have heard my hon. Friend Chris Philp give an example of how he was approached—hassled, in fact—by a claims management company. I, too, have been in that situation for a fictitious accident and I still get calls about that. Is dealing with this not one of the real ways that we will be able to prevent our being the whiplash capital?
My hon. Friend makes a very good point, which has been made by the shadow Front-Bench team and others: dealing with claims management companies is going to be a central part of this. Consultation has taken place on this, and measures have been taken against claims management companies. A significant issue remains, which we are consulting on and trying to resolve—to be honest with the House, it is the fact that many of these calls come from foreign jurisdictions, so the challenge is trying to work out the best way to deal with that. On my way into the Second Reading debate, I received exactly that kind of call, encouraging me to make a whiplash claim for a car accident that I had suffered. For a moment, I wondered whether somebody had not put somebody else up to calling me in this fashion and whether this was not some kind of fuss. Sure enough, however, this is continuing to happen.
Perhaps the company in question knew that the Minister was in for a bruising time in that debate. The absolute key to this whole debate is that this is about confidence in our legal system and in justice in compensation. The reality is that these phone calls and companies, which try to encourage people to make claims for any particular reason, are destroying confidence in that system. That is why the Bill is so necessary.
This is a really important point. At the core of our legal system there needs to be public trust and confidence in that system, and having an honest, proportionate, credible and calibrated system is absolutely central to the public continuing to have confidence.
“An injury falls within this subsection if it is—
(a) a sprain, strain, tear, rupture or lesser damage of a muscle, tendon or ligament in the neck, back or shoulder, or
(b) an injury of soft tissue associated with a muscle, tendon or ligament in the neck, back or shoulder.”
Subsection (3) states:
“An injury is excepted by this subsection if—
(a) it is an injury of soft tissue which is a part of or connected to another injury”.
I wish to pause on that point for a second, because we wish to make it clear, as the Government, that when we refer to the question of something being “connected”, we are not referring to it being connected simply by virtue of it taking place within the same accident.
I have the following on a formal piece of paper here, so that I can make my Pepper v. Hart statement to make sure that this is clear for the judiciary. In subsection (3), therefore, we have excluded those soft tissue injuries in the neck, back or shoulder which are part of or connected to another injury, so long as the other injury is not covered by subsection (2). The effect of subsection (3) would be to exclude, for example, damage to soft tissue which results only from the fracture of an adjoining bone or the tearing of muscles arising from a penetrating injury, which would otherwise fall within subsection (2). It has been suggested that the words “connected to another injury” in subsection (3)(a) could mean an injury resulting from the same accident. There is therefore a concern that a number of soft tissue injuries that would otherwise fall under the definition of whiplash injury will be excluded, and so not subject to the tariff of damages, simply by reason of being suffered on the same occasion as a whiplash injury.
This is absolutely not the intention behind subsection (3). Nor is it an interpretation that stands scrutiny. The effect of that interpretation would be to significantly limit the scope of clause 1, in a quite arbitrary way, based on whether a person happened to have incurred any other injury in the same road traffic accident. That is not the intended effect, and nor do we believe that the clause will be interpreted by the courts in this way, as it would not be the normal meaning of the word “connected” in this context. To clarify then: the words “connected to” do not, and are not intended to, extend to situations where two or more injuries are connected solely by their cause—for example, a road traffic accident.
Since the Minister was taking interventions, I thought I would chance my arm and intervene to ask, as a Scottish Member, what discussions he has had with his Scottish counterpart. The Scottish Government committed to introducing draft legislation mirroring this Bill, which is for England and Wales only. Where is that Bill? I understand that it has not even begun to make progress in the Scottish Parliament. What has the conversation been like with the Scottish Minister?
Unfortunately, tempted though I am to respond, as you point out, Mr Deputy Speaker, I am not entitled, particularly following some of the comic interventions from Pete Wishart, to speculate on what the Scottish Government think they are doing. My hon. Friend is absolutely correct, however, that they chose to withdraw from this Bill.
We have talked a great deal about whiplash injuries and how we have attempted to address them, and I am happy for others to return to that question in interventions if they wish to do so, but we have perhaps had less time to address another central issue, which is the second part of the Bill, on the discount rate.
I am pleased the Minister is mentioning that, because although we have concentrated on some controversial areas, putting the discount rate on a more modern footing is important and largely welcome, as is of course the prohibition on settlement without medical reports, which again has not been touched on but is very significant and an advance.
I want to use this opportunity to thank the Minister for what he said about the Justice Committee and the way he engaged with us and me personally. We have raised caveats with some of the objectives, and he has met us on a number of issues, if not all of them, which has enabled those of us who want to keep an eye on this and hold the Government and the industry’s feet to the fire to adopt Lord Brown of, um, Eaton, um—
That one. I ought to know him, as a fellow bencher of Middle Temple, and to get his title right. The noble Lord Brown has said that with some reluctance—because it is a balancing act—he can accept the Government’s intentions in this regard. The way the Minister has handled this difficult balancing act in the Bill has made it much easier for a number of hon. Members to do the same.
I am tempted to reflect on the question from my hon. Friend the Chair of the Justice Committee. There is a central issue and challenge at the heart of the Bill. Dealing with this perfect storm of problems—unprovable conditions, high payments, recoverable costs and the actions of the insurance industry—is not easily done through primary legislation, so I pay tribute to right hon. and hon. Members on both sides for their focus on not just the primary legislation but elements of secondary legislation and some of the requirements around it.
The only way this reform will work—the only way to prevent excessive whiplash claims—is by being very nimble in anticipating exactly how claims management companies will operate and predicting how this phenomenon could change in the future. As my hon. Friend has pointed out, that means putting in place an absolute insistence that someone must have a medical examination. At the moment, many of these claims are settled without anybody having any medical examination at all. There must be a medical examination, and it must be conducted by a qualified GP, who is currently allocated through the portal in a random fashion so that people are not in a position to be able to conspire in any way as a result of the kind of doctor whom they are given. An approved GP with the right kind of training, or a medical specialist of another sort, will then give a prognosis that will allow them to proceed in a much more straightforward way.
That brings us to the second aspect, which, again, is not primarily a question of primary legislation. I refer to the design of the online portal. It is important to ensure that, as cases move to the small claims court, people have a straightforward, intuitive way of logging claims. One of the things that we will be doing over the next year is testing and retesting the portal in as many ways as we can to ensure that it actually works.
I thank my hon. Friend for giving way again. He is being most generous.
I have been a great champion of the online work that is being done in the judiciary. I have spoken to Lord Briggs, and in my time in the courts, sitting with judges, I have championed it there. Does my hon. Friend agree that a very important element of the online system is the dramatic improvement in access to justice for people who are making claims? I know that a great deal of testing is involved, but does he also agree that the delay in its introduction is regrettable because it deprives people of that access to justice?
My hon. Friend has made a good point, but there is, of course, a delicate balance to be achieved. It is absolutely true that really good online systems can transform people’s lives and make access to justice much easier for them, but, equally, the Government do not always have an unblemished record when it comes to the delivery of IT systems. It is important to ensure that the system really works and that we have tested it again and again before rolling it out, because otherwise a system designed to increase access to justice may inadvertently decrease that access through the malfunctioning of the online portal.
I am very grateful for my hon. Friend’s generosity.
Some of the powerful evidence given to the Justice Committee came from two members of the judiciary who spoke about the potential unintended consequences and adverse impacts on the courts of the inability of an increasing number of litigants in person to work their way through the portal. Will my hon. Friend undertake to ensure that throughout the ongoing work on its design, the issues raised by members of the judiciary will remain central to the discussions, and that they will have a full role in the testing and roll-out?
The answer to both those questions is yes. An important concession was made in the House of Lords to extend the amount of time for testing, so that there is more time in which to make sure that the portal has been properly tested by, among others, the judiciary.
Part 2 of the Bill relates to the discount rate, and results from a very sudden change in the way in which compensation was paid to catastrophically injured victims. After 16 years in which the discount rate was set at a positive 2.5%, the last Lord Chancellor but one decided to reduce it to minus 0.75%, which radically changed what happens when someone is allocated a lump sum.
Let me remind the House of the formula that is applied. If, Mr Deputy Speaker, you were attempting to receive compensation for a projected 10 years of life, you were seeking £100,000 of care costs for each of those years, and inflation was, for the sake of argument, zero, you would receive only £1 million to cover you for your 10 years of projected life. Obviously, if inflation was higher, the real-terms increase in your care costs would mean that you would have to be afforded more, and the calculation that would need to be made in the awarding of the money would be how much of a return you could reasonably expect to receive for your money. If you could reasonably expect to receive a higher return for your £1 million, it might be possible to cover you for more years, and vice versa: fewer years would mean a lower return. The discount rate has been applied since the 1970s by the judiciary, and since 2001 by the Lord Chancellor, to enable the courts to calculate the fair rate to apply to a lump sum in the case of catastrophic injury. That sudden change from 2.5% to minus 0.75% meant that in the single year 2017-18 the NHS faced £404 million of costs. Projected forward at that rate, there are potentially not just hundreds of millions, but billions, of pounds of costs attached to the public Exchequer and through insurance premiums on the public themselves. Therefore, through the pre-legislative scrutiny conducted by the Justice Committee and the Government Actuary’s Department we have attempted to strike a proportional balance between the interests of often very vulnerable, catastrophically injured victims and those of society as a whole.
Is it not the case that the mechanics of the discount rate as it was constituted by the Lord Chancellor before the previous one effectively mean that claimants are estimated to be receiving substantially more than 100% entitlement, and that is not what the system is about? We need a system that reflects current investment strategies and current investment returns.
This is a serious issue. The intention of the award made by the court is to provide 100% compensation. In other words, the intent of the court is to make sure that catastrophically injured victims receive the sum of money required to cover their lifetime care costs or loss of earnings. The best way of doing this is through a periodic payment order, which is why we have asked the Master of the Rolls and his committee to look at the use of PPOs. Under such orders, the real costs of people’s care year on year to the moment of their death will be covered; that is how the PPO operates. There is no need to give people a lump sum and speculate somehow on how long they are going to live.
In all cases we would encourage people to make much more use of PPOs. It is true that victims often do not want to accept PPOs. They would rather accept a lump sum either because they believe they can invest it and potentially generate more money or because they feel that were they to die prematurely they could pass on that lump sum to their relatives, but that is not the intention of the award. The award is designed to produce 100% compensation for their care costs.
We must get this right for people who have had those catastrophic injuries; their lives are changed forever. Getting this discount rate right is also important because it will affect how they will invest. What more can we do to ensure that they are not forced into, or tempted to, make riskier investments over the course of their lifetime, which will affect their care?
That is absolutely right. First, we must bear it in mind that when looking at compensation for somebody in terms of their lifetime care costs, there are a number of uncertainties. First, the court has to make a judgment as to how long they believe that catastrophically injured victim will live, which is very difficult. Secondly, they have to make some kind of judgment of the future performance of the financial markets in order to work out what a reasonable rate of return would be to cover those lifetime care costs. For that reason, the PPO is a much more reliable mechanism. However, in relation to the question of the risks taken by the individual, we have made it clear both in the Bill and subsequent statements what we intend in the decision of the Lord Chancellor. This will be a decision of the Lord Chancellor acting in a quasi-judicial role; this is not the Lord Chancellor acting on behalf of the Treasury, which is why the Lord Chancellor before the previous one ended up at a minus 0.75% rate, which would not have been the preferred Treasury rate. The Lord Chancellor is to make that decision on the basis that the individual concerned is a low-risk investor, and we would expect that individual to be taking less risk than would be taken by a traditional widows and orphans fund. In other words, because of the vulnerability of the investor and the importance of the return in covering things such as their lifetime care costs, we would be conservative in setting this rate.
We are confident that the rate that would be set would be better than the current rate, which imagines simply a gilt return, which does not reflect the actual nature of investing or of returns.
We are also clear that we are aiming for 100% compensation. We are not chasing a median compensation in which 50% would be under-compensated and 50% over-compensated. In fact, the Lord Chancellor would retain the discretion, on the advice of the expert committee and the Government Actuary’s Department, to be able to vary that rate. The judiciary would have the possibility of varying the rate in exceptional circumstances. Let us be in no doubt that we have an obligation to the public purse, to the NHS and to the public as a whole to control the costs. We have a moral responsibility to ensure that the compensation paid is 100% and not 125%, but we also have a moral obligation to ensure that vulnerable individuals who have suffered catastrophic injuries are properly compensated.
The Bill contains measures to reform whiplash claims and the discount rate, and it is the result of an admirable exercise in serious discussion in the upper House, in Committee, with the Justice Committee and through engagement with civil society since 2012. It contains a pragmatic, nuanced and calibrated set of measures that will deal with the excessive costs of whiplash and ensure that the discount rate is set in a way that balances the needs of our most vulnerable victims with the needs of the public purse. On the basis of that, and with great thanks to right hon. and hon. Members, I commend the Bill to the House.
It is regrettable that we are here for the Third Reading of yet another Conservative Bill that unleashes a Tory attack on the rights of victims and undermines access to justice. When the record of this Conservative Government is written—probably sooner rather than later, if the media reports are to be believed—the way in which they have entrenched a two-tier justice system will be writ large on the political epitaph of the Prime Minister and this Government. The cruelty of the Conservatives’ cuts to legal aid will be one example of that. Their wilful policy of making it harder for people to take on dodgy landlords or to challenge a flawed benefits decision or cruel immigration decision will be another, at a time when people need that kind of support more than ever. The Conservatives’ record on employment tribunal fees will also be something that we in this country will look back on shame. It is not only unlawful, as the Supreme Court decided, but immoral.
I will not.
The Government’s intent was clear for all to see. They are making it harder for workers to take on unscrupulous bosses—[Interruption.] If Kevin Hollinrake wishes to speak for the insurance industry, he can do so. Step up!
I thank the hon. Gentleman for giving way. I was not going to speak for the insurance companies. I was going to ask whether he welcomed the fact that the Bill will lower the price of insurance for consumers. Does he not welcome that?
There is absolutely no guarantee of that happening as a result of the Bill. That is not its real purpose. It actually undermines access to justice. As I said on Second Reading, this is yet another attack by the Government on our justice system and on the vulnerable. It is an attack that will, in practice, enrich the Conservatives’ friends in the insurance industry—[Interruption.] As we can hear, Conservative Members do not like that allegation, and they did not like it when I made it on Second Reading. Maybe it touches a nerve. The Government had a chance to disprove it by their actions, by backing amendments that would have ensured that the Bill would not simply line the pockets of the insurers, but they did not do that.
In their media briefing, the Government claim that the Bill is about cutting the number of fraudulent whiplash claims. Of course, no one would disagree with doing that, and had the Government taken measures that did that in reality and simply stopped there, they would undoubtedly have built a broad consensus and the Bill would have been uncontentious. They did not do that, however. Instead, they pressed on with measures that will penalise the many. That, alongside their dire record on access to justice, is why we still believe that these reforms are a smokescreen. I know that there are many Conservative Members who pride themselves on defending our justice system, on upholding the rule of law and on promoting access to justice. Today is the day for those Members to show that they put their commitment to those important principles above narrow party interest by rejecting the unjust proposals.
The Bill started in the Lords, where it faced substantial opposition, not only from Labour Members or Members representing other political parties, but pre-eminent legal experts, including former Lord Chief Justices, who expressed their concerns about the Bill’s impact on access to justice and the independence of the judiciary. The Government only narrowly defeated amendments—similar to those we have discussed today—that would have fundamentally altered the Bill for the better. Since then, they have not taken the opportunity to listen, not even to those pre-eminent legal experts. They have not tried to negotiate or to remove the barriers to justice that define the Bill. For those reasons and others that I will set out, Labour Members will vote against it.
Before addressing the Bill’s provisions, I wish to place on record other elements of the package of reforms that are intended to be passed through statutory instruments. Through that route, the Government want to increase the small claims limit from £1,000 to £2,000 in all cases and from £1,000 to £5,000 in road traffic accident cases. That will make it much harder for workers to get compensation for workplace injuries, and for genuinely injured people to get a fair settlement. A significantly greater number of claims will be dealt with through the small claims procedure, whereby no legal costs are usually awarded, even in successful claims.
When legal fees are not covered, tens of thousands of working people will simply be priced out of obtaining legal assistance, resulting in many pulling, dropping or not pursuing their cases. Of course, others, determined to secure justice, will fight on, but by representing themselves, at a massive disadvantage. An insurance company will be served by a legal expert fighting their case. The victim will be left to try to navigate a complicated legal procedure, placing greater pressure on our already overstrained courts. Some will choose to pay their legal fees out of their compensation, but then, in practice, they will be compensated less than a court found appropriate. As always, the wealthy will be able to afford the best legal advice and the rest will have to suffer.
Justice for the many, not the few is mere rhetoric for the Government. In reality, it is justice for the few, not the many. Is that why the Government are trying to sneak measures through the back door rather than putting them in the Bill so that they could be debated and amended? That is a cowardly attack on workers’ rights, pushed through without real debate or scrutiny. That just about sums the Government up.
I want to give some real-life examples of people affected by the reforms because far too often their voices are not heard in this place.
Order. I gently say to the shadow Secretary of State, who has come on later than he might have expected to speak—the Minister was within his rights to speak for an unusually long time for Third Reading—that Emma Little Pengelly indicated to me several hours ago that she wished to contribute on Third Reading. It would be most unfortunate if there were not an opportunity for Back-Bench Members to speak. I am not blaming the hon. Gentleman, but I ask him whether he might take account of the interest on both sides of the House.
Thank you very much, Mr Speaker.
Those people include a driver, working to take disabled people to and from a day centre, who, because he had not been properly trained, fell off the vehicle while assisting a wheelchair user and suffered a back injury. They include a cleaner in a hospital who, while mopping the floor, went to pick up some papers and pricked her finger on an unsafely discarded needle. She suffered a psychological and physical injury. Just imagine the fear she must have felt as she waited for the test results. Those are examples of cases that have been sent to my office, and of real people who would be penalised by the new system. Those are the people whose voices the Government are content to drown out with their rhetoric that labels people fraudsters and says that they are on the make when they are anything but.
When we consider the Bill, we should not forget that there was a 90% drop-off in employment tribunal claims when employments tribunal fees came into effect. Something similar could happen again with personal injury cases, with genuine victims priced out of justice and deterred from pursuing a claim for an injury that was not their fault.
It is not only Labour who oppose this Conservative attack on access to justice. The Justice Committee has explained that
“increasing the small claims limit for personal injury creates significant access to justice concerns.”
We agree with the Justice Committee and the recommendation of the Lord Justice Jackson review that the small claims limit should be increased in line with inflation, which would mean a rise to £1,500, not the £2,000 currently proposed. We have repeatedly tabled amendments to the Bill, and it is a shame that the Government have not listened. We have also made clear our position on tariffs, and it is a shame that the Government have not responded in a meaningful way to those amendments.
I am conscious that Mr Speaker has asked that I shortly draw my remarks to a conclusion, but I urge every Member of this House to look at the chart produced by the House of Commons Library at page 30 of the briefing and ask themselves whether this is just. What does the chart show? It shows that compensation for an injury lasting up to six months will fall to a fixed £470, down from the current average of £2,150—down by three quarters. Compensation for an injury lasting 10 to 12 months will be £1,250, down from the current average of £3,100—down 60%. Compensation for an injury lasting 16 to 18 months will be £2,790, down from £3,950—down by 30%. Is that what the Conservatives mean by justice?
Injured people who have done nothing wrong are losing out and being placed at a huge disadvantage. If Conservative Members do not want to take Labour’s word for it, they should at least think very carefully about what was said in the House of Lords. The point has already been made that this Bill undermines the independence of the judiciary with the tariff system. We have commented on the definition of whiplash and on the fact that the Government are making out that fraud is taking place on an industrial scale. Do something about cold calling from claims management companies; do not target injured people.
The central purpose of the Bill is to tip the scales of justice against injured people and in favour of insurance companies’ profits. The Conservatives have shown that this is about lining the pockets of insurance companies by refusing to vote for Labour’s considered amendments, which would have protected vulnerable people and safeguarded fair treatment for victims. This attack on justice is not the first by this Government since 2010—after legal aid and employment tribunal fees—and I fear it will not be the last Tory attack on access to justice.
The wider measures that the Conservatives plan to introduce alongside the Bill will leave tens of thousands of people unable to enforce their legal rights. The Bill may well turn out to be the thin end of the wedge for yet more restrictions on justice in all personal injury cases. If it passes, it will be celebrated as a great victory by the insurance companies in whose interests it has been conceived and drafted, and it will be ordinary people, whose rights are gradually chipped away, who pay the price. That is why Labour will be voting against Third Reading tonight.
It is a privilege to follow Richard Burgon, although I was slightly concerned that, as he reached his peroration, a sudden stop in his speaking might have caused some whiplash to himself, but he seems to have escaped from the Dispatch Box unaffected.
The Joseph Malins poem “The Ambulance down in the Valley” tells the story of a village on a cliff edge and, instead of putting up a fence around the cliff edge, the residents decide to put an ambulance down in the valley to treat people when they fall and are injured at the bottom, but that is not this Conservative Government’s approach.
The Government announced in 2015 that they were investing £1.5 billion in smart motorways to help to alleviate the stop-start traffic that is so often the cause of collisions that result in whiplash. Although I am sure you and I are not prone to this, Mr Speaker, lesser mortals than us occasionally use their mobile phone while driving, and this terrible distraction can also lead to accidents that cause whiplash. So what have this Government done about it? In 2017 they increased the penalty for those caught using a mobile phone while driving to six points and a fine of £200. For those caught a second time, the penalty rises to 12 points, a possible ban and a possible £1,000 fine. So it is important that we do not just talk about dealing with the problem of whiplash—how about we try to alleviate it or remove it in the first place? That is what this Government are doing.
This Government are also making sure that we look after the just about managing. In my constituency, which I understand is the most deprived one represented by a Conservative MP, every pound these people have matters to them; it is incredibly important. So if this Bill can go some way to reducing insurance premiums, surely that is to be valued. I have heard the figure of £35 mentioned. Some people might consider that to be insignificant, but when someone is on a low salary, as people in my constituency are, of course every pound matters.
That is not the only thing we have done. When I think about my constituents tuning into Parliament TV, as I am sure they often do at 10 to 7 on a Tuesday evening, I often think they will be considering the debate in isolation. So my job, as their MP, is to try to bring some context to the discussion. They will think, “This is good. I am glad we are introducing this policy that might help to reduce my insurance premium. But what else are you doing on our behalf, Eddie?” I would say, “Well, I am part of the Government that increased the tax-free allowance to £11,850 last year.” To people in my constituency on an average salary of £27,000 that is a hugely significant difference. What else did we do? We increased the minimum wage to £7.83, which has helped 2 million workers. Therefore, we need to consider this in context.
It is so important that we have the injury tariff in this Bill, because that will give us the opportunity to streamline claims and lower premiums, with the hope that that will then be passed on to my constituents. There are a number of things to be valued in the Bill, all of them good Conservative principles. They are just one part of a theme that runs through this Parliament, which is about looking after all the people of the United Kingdom.
Thank you for the opportunity to speak in the debate, Mr Speaker. I will try to be as brief as possible. Of course, all the Bill’s clauses refer and apply to only England and Wales, so I thank the Minister for his engagement with me about them, many of which will be of benefit, including those on access to justice at the lower end in relation to the whiplash issues and on the adjustment of the discount rate. I want to raise a particular issue on which I have engaged with the Minister on an ongoing basis: the discount rate situation in Northern Ireland.
As a result of the stagnant and stalled political solution in Northern Ireland, we have not been able to address the unfair discount rate of 2.5%. Let me put that into context. Under that discount rate, an 18-year-old with £100,000 per annum of requirements will get about £5 million to £6 million, whereas under the changed UK rate, that sum would be £9 million. We are therefore talking about a hugely significant difference, particularly for those who have suffered catastrophic injuries through no fault of their own, and it needs to be addressed urgently. Yes, the adjustment of the discount rate under this Bill will narrow the gap, but that gap will still be significant. I have asked the Minister to consider extending the Bill to cover Northern Ireland. I know the legislation will head back to the House of Lords and I understand fully the challenges in introducing this issue, but it is now clear that it could be extended. This is a non-controversial issue. There are people in need and an unfairness in place, so I ask the Minister seriously to consider extending the provision to address this injustice in Northern Ireland.
I beg your indulgence, Mr Speaker, in my putting on record the fact that today is the 25th anniversary of the Shankill bomb. That IRA bomb killed nine innocent civilians, including two children—13-year-old Leanne and seven-year-old Michelle. I just want to pay a tribute, because this Bill is about access to justice. The person who was convicted of that bombing served just seven years and was released under the terms of the Belfast agreement in 2007—that was seven years for nine innocent lives taken by that bomb. I do want to say on record that my thoughts are with the families at this very difficult time. Thank you, Mr Speaker.
May I concur with the comments of Emma Little Pengelly about that terrible tragedy, and also the terrible injustice that followed in the process of the prosecution of that crime? Our thoughts are with all the families at this moment in time.
The Bill is surely about fairness—making sure that we look after the interests of consumers. I echo the comments of my hon. Friend Eddie Hughes when he said that this Government are championing the cause of the consumer and making sure that we drive down the costs of living. There have been many examples of where we have been able to do that over recent months, such as the cap on energy costs, of course, and the Tenant Fees Bill, which is, as you know, Mr Speaker, something that is very close to my heart as it is related to my previous profession. I say that despite the significant hit to our business—Members can check my entry in the Register of Members’ Financial Interests—because it is absolutely the right thing to do. We should look after the interests of consumers and make sure that their interests are fairly represented.
There are other areas in which we seek to legislate, such as leasehold reform to make sure that people do not find that they are paying unfair charges for leasehold properties. That is another instance of how we are trying to drive down the costs of living for our consumers.
Stephen Pound indicated from a sedentary position that he questioned the relevance of my hon. Friend’s points about the fact that we are trying to drive up the standard of living and reduce the costs of living, but it was absolutely relevant, as this is a key strategy of the Government. We want to make sure that we reduce the cost of living and increase the standard of living.
The Bill also, of course, fulfils a manifesto commitment. We were clear in our 2017 manifesto that we would deliver on the promise to reduce insurance costs, and that is what this is all about. We are still making sure that people get fair compensation, but we are reducing car insurance costs for the majority. That, along with simplifying the system, is the principle of this Bill.
It is very disturbing to hear my hon. Friend’s comment that this country is the whiplash capital of the world. It is therefore only right that we take action in this area and try to reduce the excessive costs of whiplash compensation, which do, of course, affect us all. This is not about saying that we will not give people fair and appropriate compensation when accidents happen, but it is about clamping down on the worst excesses. With a 40% increase in the number of claims since 2005-06, it is only right, when our roads are actually safer, that we make sure that any compensation paid for accidents on the road is commensurate with the injury itself.
It is absolutely right that we stand up for genuine claimants, but we must provide fair compensation for those claimants. The Opposition’s amendment 2 was simply a wrecking amendment. It is clear what this Bill is about, and that amendment would have hit right at its heart. Without being able to control the tariffs for compensation, the Bill would have been pointless. I guess that it will not be the last wrecking amendment that we will see in this place over the next few months, but it is absolutely right that this Bill, which implements a manifesto commitment, passes through the House.
It is also right that we try to make sure that insurers pass on the savings from which they will benefit as a result of the Bill. It is right, too, that there is clear supervision of the rules to make sure that those savings are passed on to the consumer.
Let me briefly touch on claims management companies. As my hon. Friend pointed out, despite the fact that many have a bad reputation, they do a very good job in making sure that, when compensation is due, that compensation is paid. I have slight concerns that these claims management companies will now come under the auspices of the Financial Conduct Authority. Hon. Members will recognise that much of the work that I have done in this place has had the aim of trying to hold the banks to account for some of their worst excesses, particularly against small businesses, following the financial crash in 2008, but the regulator has seemed incapable of doing that in many cases. Many people think that the regulator is too close to the banking sector, and I am slightly concerned that it is regulating both ends of the process.
Debate interrupted (Programme Order,
The Chair put forthwith the Question already proposed from the Chair (
The House divided:
Ayes 294, Noes 238.
Division number 248